What is a good debt-to-income ratio
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What percentage of your income should go to debt repayment.
What Constitutes a Good Debt-to-Income (DTI) Ratio?
A debt-to-income ratio (DTI) is a personal finance measure that compares the amount of debt you have to your overall income.
It shows how much of your money is spoken for by debt payments and how much is left over for other things.
Lenders, including anyone who might give you a mortgage or an auto loan, use DTI as a measure of creditworthiness.
Debt calculatorDTI is one factor that can help lenders decide whether you can repay the money you have borrowed or take on more debt.
A good debt-to-income ratio is below 43%, and many lenders prefer 36% or below. Learn more about how debt-to-income ratio is calculated and how you can improve yours.
Key Takeaways
- Your debt-to-income ratio shows what percentage of your available income is already going toward paying off debt.
- Lenders look for low debt-to-income (DTI) figures because borrowers with more available income are more likely to successfully manage new monthly debt payments.
- Credit utilization impacts credit scores, but not debt-to-credit ratios.
- Creating a budget, paying of
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